Mexico, the third in Latin America with the most debt issues

29/01/2019

Latin America's high-yield issuances are at the lowest level since 2011, since 16 issuers sold 11,400 million dollars in debt in 2018, a figure lower than the 24 issuers and 27,200 million dollars issued. in 2017. A lower number of issues by Petrobras, contributed to reduce the volume of issuance in 2018.

Due to economic uncertainty, investors bet less on debt; exchange rate and low debt, the main incentives in favor of the country

According to the rating agency Moody's, the increase in interest rates in the United States, the risks to world trade, the political uncertainties and specific issues of each country in the region have limited investors' appetite for high-yield bonds. of Latin America, in the second half of 2018, so that high-yield issues in the first quarter of 2019 will depend on the reaction of the market to the policies carried out by the new administrations in Brazil and Mexico.

According to the analysis, the universe of high performance includes 98 companies in Latin America with 101 billion dollars in outstanding nominal debt, since data as of December 31, 2018 of the rating agency, highlight that most of the high-performance corporations are domiciled in Brazil (37 percent), Argentina (17 percent), Mexico (12 percent) and Peru (10 percent).

As for our country, the outlook is positive, with an increase in the financial market and the exchange rate, which is why volatility was offset by economic growth of 2.1 percent and the decrease in public debt indexes, which It could raise the appetite of investors.

However, the rating agency sees risks in the 2019 Budget, which will remain in place throughout this administration, increasing the risk that Pemex and CFE will become a recurrent drain of federal funds or government resources, which could undermine the sovereign's credit profile in the medium term.

According to the rating agency, the ratio of casualties to rating hikes in the region remained low in 2018, and the rating actions reflected specific developments of the issuers, rather than rating actions related to sovereign-level rating changes.

At the end of the fourth quarter of 2018, 87 percent of the high-performing companies had a stable outlook and there were no positive or negative prospects, related to those at the sovereign level in the region.

The high-yield bond markets of Latin America will absorb little more than 3 billion dollars in upcoming maturities, until the end of 2019, none of which has a lower rating. Looking ahead, the risk of refinancing will increase in 2020, with most debt maturities of 10 billion dollars, with weak credit quality.

As for the companies that enjoy a good rating and that could make emissions this year, the following stand out: Nemak (stable Ba1), Rassini (Ba2 stable), Grupo Posadas (positive B2), Elementia (positive Ba2) and Javer (positive B1); while in Brazil, Gerdau (positive Ba1) and Minerva (positive B1); in Peru, Buenaventura (B2 positive); and in Paraguay, Telefónica Celular del Paraguay.